Estimate what a customer is worth over the life of the relationship and where the headroom to grow it sits, because you cannot grow a number you have never measured.
Lifetime value is what a customer is worth across the whole relationship, not just the first sale. Lifetime value = average customer value per period, times the average number of periods they stay. Work it out for your typical customer, and where you can, per tier.
| Customer / tier | Value per period | Average tenure (periods) | Current lifetime value | Potential lifetime value (if grown) | Headroom |
|---|---|---|---|---|---|
The headroom is the point. The gap between current and potential lifetime value is your expansion opportunity made concrete. Seeing how much value sits untapped in customers you already serve is usually what moves expansion up the priority list, because growing an existing customer costs a fraction of winning a new one.
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